Effective from 1 April 2025, the UK government will implement significant increases to both the National Minimum Wage (NMW) and the National Living Wage (NLW). These adjustments aim to enhance the standard of living for workers across various age groups.
Whilst this is great news for employees, we know this comes with some challenges for businesses who now need to update their policies, processes and financials.
Here’s the details you need to know about the new wage rates:
- National Living Wage (Age 21+): Rising from £11.44 to £12.21 per hour.
- National Minimum Wage (Ages 18–20): Increasing from £8.60 to £10.00 per hour.
- National Minimum Wage (Ages 16–17) and Apprentices: Up from £6.40 to £7.55 per hour.
These changes represent substantial increases, particularly for younger workers and apprentices.
Read more about these changes here on the government website.
The impact this is going to have on businesses:
While these wage hikes are a positive step for employee welfare, they present several challenges for businesses:
- Increased Payroll Expenses: Companies will face higher salary outlays, potentially affecting profit margins.
- Budget Reallocation: Businesses may need to adjust budgets, potentially reducing funds available for other operational areas.
- Pricing Strategy: To offset increased costs, some businesses might consider raising prices, which could impact competitiveness.
- Compliance Risks: Failure to adhere to the new wage regulations can result in penalties, reputational harm, and legal complications.
- Updates to Contracts and Payroll: Businesses will need to review and update all employee contracts and payroll to accommodate the new increases.
Here’s our recommended actions for businesses to take now:
To navigate these changes effectively, here’s some things your business can start doing:
- Review Compensation Structures: Ensure all employee wages align with the new rates.
- Update Budgets: Incorporate the increased wage expenses into financial planning.
- Assess Pricing Models: Determine if adjustments are necessary to maintain profitability.
- Educate Management: Train supervisors and HR personnel on the new wage requirements to ensure compliance.
How Can CE People Assist You and Your Business?
At CE People, we understand that adapting to regulatory changes can be daunting, but it doesn’t need to be. Claire and Emma are here to support you in any way we can, some of the support we offer includes:
- Comprehensive HR Audits: Evaluating current practices to ensure alignment with the latest wage laws.
- Policy Development: Crafting clear policies that reflect the new wage standards.
- Training Programs: Educating your team on compliance and best practices.
- Workforce Planning: Getting the best out of your current staff by identifying skill gaps, and creating progression plans, reducing the need for costly external hires.
- Ongoing Support: Providing continuous guidance to address any HR challenges that arise.
By partnering with CE People, businesses like yours can confidently navigate these wage changes, ensuring compliance and creating a supportive environment for your workforce.
